Macedonia

New Business Haven in Europe

November 18, 2013

Pearl of the Balkans, Macedonia has long been a crossroads of major world civilizations: Ancient Macedonian, Roman, Byzantine and Ottoman.

Today, the nation, which achieved independence in 1991, retains its multicultural heritage, and under Prime Minister Nikola Gruevski it has built an open, investment-friendly brand as a haven for business in Europe.

Macedonia boasts a prime location less than 1,200 miles from most EU capitals and close to North Africa, Asia and the Middle East, as well as an excellent infrastructure and cost-effective workforce. As if that were not enough, Macedonia’s pro-business government has passed investment incentives, free-trade agreements and legal guarantees to make it even more profitable and competitive for prospective investors.

The constitution ensures equitable treatment for foreign investors, including 100% ownership, full protection rights and no profit relation limits. Foreigners are free to buy and develop real estate.

Macedonia is a member of the Multilateral Investment Guarantee Agency (MIGA) and maintains investment-protection treaties with nations worldwide.

When opening a business, online and one-stop-shop facilities enable company registration in just four hours. Modern labor laws make the workplace flexible, keeping payroll and operating costs lower than those of neighboring countries. And a flat 10% corporate and personal income tax means investors reap maximum benefits.

The World Bank’s “Doing Business 2013” report included Macedonia among the top five reformers worldwide, and Forbes rated it 37th on its “Best Countries for Business” list last year, 45 places higher than in 2007. With opportunities expanding in manufacturing, free economic zones, real estate, tourism, agribusiness and a wealth of other sectors, now is the time to invest in Macedonia.

Strategic Goals

Following Prime Minister Nikola Gruevski’s reelection in June 2011 for a third term, his government unveiled its program through 2015, which focuses on five strategic goals: increasing economic growth and employment to improve citizens’ quality of life; integrating the country into the EU and NATO; judicial reform and rule of law; maintaining interethnic stability and relationships; and investing in education, science and information to develop a knowledgebased society.

In the first post-independence decade, Macedonia’s economy began to take off, despite numerous external and internal challenges. By 2006, the country had found its feet and posted solid 5% annual average GDP growth, although the effects of the global financial crisis were felt in 2009.

After recovering well and registering a 2.8% GDP rise in 2011, the economy reached a total value of almost $10 billion by the end of that year. The first half of 2013 brought more good news, with a 2.8% hike in GDP, above the government’s projections.

With a population of just over 2 million, a quarter of whom live in the capital, Skopje, Macedonia may be modestly proportioned, but its global ambitions most definitely are not. The EU recognized it as a candidate for membership in 2005, and it has met all criteria for NATO membership since 2008.

Though a dispute with Greece over the use of its name still presents a barrier, Macedonia recently received EU plaudits for its democracy, justice system and economy, and remains on track for integration into both organizations.

SPOTLIGHT

Q&A With Prime Minister Nikola Gruevski

Nikola Gruevski, Prime Minister of Macedonia

Nikola Gruevski studied economics before becoming the first broker on Macedonia’s stock exchange. As minister of trade and minister of finance, he ushered in economic deregulation and introduced a value-added tax and a flat tax rate. He won his first election in 2006 and was reelected in 2008 and 2011. He recently spoke about Macedonia’s image, investment incentives and integration plans.

What is the image of your country you would like to project?

A government that wants to talk to every business, domestic and foreign. Domestic businesses make all the difference between the present and past. Foreign companies facilitate cooperation between governments. Talking to them, we are helping citizens, especially [those] looking for work. We believe the strength of the business community is reflected in the strength of our country. By reducing taxes, we are giving more opportunity for capital to be invested in new capacities and new people. This is our philosophy.

What ideas encapsulate Macedonia’s unique selling point?

We are a country where production can be exported, without customs duties, to Europe. At first glance, we are a small market. But when you consider you have free trade with not just EU but also non-EU countries, that is a different story. Second, we have a very good business climate. [Our] World Bank rating is better than [that of] plenty of other countries. Third, [we have] an educated workforce that is not expensive and [is] ready to train. There is no other country that has a lower cost of doing business.

What other advantages does Macedonia offer?

Anybody investing over 400,000 euros (around $535,000) can have citizenship and a passport. And anybody investing more than 40,000 euros (around $53,500) can have residency. That may not be important for investors from the U.S. or Western Europe, but it is for investors from Asia, Latin America and the Middle East.

In which areas are investments targeted, and what incentives are on offer?

High tech, pharmaceuticals, agriculture, automotive, machinery, ICT and tourism—these are all areas on which we are focusing. At the moment, we are considering everything with the aim of reducing unemployment. Two-thirds of companies in Macedonia do not pay tax on profits. Find another country where this exists. If somebody decides not to distribute dividends, to increase capitalization or invest, they do not pay a tax on profits. Up to 75% of companies in Macedonia are choosing this and not paying. Additionally, in the free economic zones, benefits are considerable. What we are offering, we are offering everybody.

What about EU and NATO integration?

We fulfilled all criteria for NATO in 2008. NATO recognized this, and at all summits afterward they reaffirmed it. In 2009, the European Commission announced we were ready to start negotiations for full membership. Unfortunately, this has still not been realized. We are talking with our neighbor to find a solution and eventually join [both groups]. We have a national consensus and strategy, whoever is in government: to become a member of NATO and the EU. Public support is very high. About 80% to 90% of citizens are in favor.